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It is upto the bank to recover money from guarantor or borrower: NCDRC

The national consumer commission has dismissed a man's plea filed against a bank which recovered from him the dues, borrowed by a person whom he had introduced to it, saying that "it is the choice of bank to recover money either from the guarantor or the borrower".

National Consumer Disputes Redressal Commission (NCDRC), presided by Justice J M Malik, dismissed the complaint filed by Kerala resident R S Vasan against Canara Bank, while rejecting his contention that he was not a guarantor and that for the recovery, the bank should have first approached the family of the borrower who had died.

"It is well-settled that it is the choice of the bank to recover the money either from the guarantor or the borrower. It is abhorrent from the principles of law to say that the bank must first of all recover the money from the borrower and thereafter it can proceed against the guarantor," NCDRC said. It passed the order while hearing a revision petition filed by the bank against Kerala State Consumer Commission, which had directed it to pay Rs 1,49,698 to Vasan.

The district forum, too, had decided the case in Vasan's favour. NCDRC reversed both the orders passed by the lower foras. NCDRC, while rejecting Vasan's claim that he had no intention to be a guarantor, said that he had signed the blank papers at his own peril. "The complainant signed the blank papers, if any, with his open eyes and on his own volition. Even if he has signed the blank papers, he did it at his own peril," it said.

Vasan had told the district forum that he introduced C K Prabhakaran to the bank on June 22, 1996, which extended Rs one lakh to him (Prabhakaran) against immovable property. He said that he had no intention to be a guarantor or a surety for the overdraft facility given to Prabhakaran, but he was made to sign some blank papers. He said that Prabhakaran died on June 7, 2001, and the bank informed Vasan on June 22, 2003, that overdraft facility had been given on his (Vasan) surety and a sum of Rs 1,36,135.50 could be liquidated against his term deposit. Vasan, however, immediately replied denying his liability.

In the meantime, the bank issued another letter mentioning the amount due as Rs 1,45,799.30. Subsequently, it informed Vasan that the amount under overdraft had been adjusted against his term deposit. The district forum, however, had asked the bank to pay Vasan Rs 1,48,698 and also to pay Rs 1,000 as costs. The state consumer commission dismissed the appeal, filed by the bank against the forum's order, with Rs 5,000 as costs.

 Article referred: http://www.dnaindia.com/money/report-it-is-upto-the-bank-to-recover-money-from-guarantor-or-borrower-ncdrc-2017218

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